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What next for Mitsubishi’s NedCar and Normal plants?

Mitsubishi Motors North America (MMNA)’s new advertising campaign comes just weeks before Mitsubishi Motors Corporation (MMC) announces its plans for the severely under-utilized Mitsubishi car plants in the US and Europe. According to Ward’s, the new adverts promote the Japanese-built Lancer and Outlander (including the Outlander Sport, badged elsewhere as Mitsubishi ASX), with no mention of Mitsubishi’s US-built models.

MMNA’s 240,000-upa plant at Normal, Illinois, built only 18,502 units in 2009. A 25% drop in US sales in 2008 forced a four-month production stoppage at Normal in early 2009. Normal, which currently builds the Eclipse, Endeavor and Galant, assembled 59,018 units in 2008 and 78,732 units in 2007. In 2003, when Normal’s roster included the Chrysler Sebring and Dodge Stratus Coupes, it produced 173,699 units, down from 202,611 units in 2002 and 221,975 units in 2000, when production also included the Dodge Avenger Coupe.

MMC’s president and chief executive, Osamu Masuko, has said that pulling out of the US market has never crossed his mind. The new ad campaign and MMNA’s plans to lift US sales to over 200,000 units support this. What has been missing for so long – and there appears to be no sign of it in the near future – is investment in Mitsubishi’s US manufacturing operation. Indeed, Mitsubishi last month honoured a 2008 labour contract which called for a pay rise for the 1,400 Normal employees if MMC failed to invest in a new model or platform at the plant.

MMC’s president and chief executive, Osamu Masuko, has said that pulling out of the US market has never crossed his mind.

In Europe, Mitsubishi’s 200,000-upa NedCar plant at Born in the Netherlands built just 50,620 units in 2009. Current production is of the Colt and the Outlander. In 2008, the plant built 59,223 units, and in 2007, 61,912 units. Since 2000, output has declined annually, from 215,084 to 191,239 in 2001, 182,261 units in 2002, and 163,080 in 2003. Until 2004, the plant also built the Volvo S40/V40, overlapping with the start of production of the smart ForFour. ForFour production ceased in 2006 due to poor sales, the first year in which NedCar’s annual output fell below 100,000 units.

Through Mitsubishi’s partnership with PSA Peugeot Citroen, the Outlander is also sold as the Peugeot 4007 and Citroen C-Crosser. The NedCar plant had been scheduled to build EU-bound PSA models from January 2009. The transfer from Mizushima to NedCar was postponed – apparently now indefinitely – and NedCar continues to build only the Mitsubishi version. Indeed, Outlander assembly at NedCar is a CKD operation, using locally-pressed panels and engines sourced from PSA and Volkswagen.

NedCar builds the Outlander for “the EU27″. Non-EU countries, including Switzerland, receive the Outlander from Japan. Since September 2010, the new PSA-Mitsubishi plant at Kaluga, Russia, builds the Outlander and its PSA equivalents (currently SKD) exclusively for Russia.

Despite the poor performance of these two plants, MMC’s global output in 2009 stood at 794,681 units, with overseas production accounting for 46% of total output.

According to NedCar, MMC has guaranteed Colt and Outlander production at Born until the end of 2012. The Colt, which in 2009 accounted for around 85% of NedCar’s output, will be replaced in 2012 by a vehicle based on the Mitsubishi Global Small car. Mitsubishi is investing Baht 8bn to build that car in Chonburi Province, Thailand – currently the source of the Triton pick-up – from as early as September 2011. Thailand has been encouraging vehicle manufacturing investment by offering tax exemptions through its so-called Eco-car project. MMC has hinted that Global Small could also be built in other emerging markets.

No investment has been announced for NedCar.

In its 2009 annual report, NedCar confirms that “2010 is…a crucial phase in the decision-making process surrounding its survival” and that “In 2010…Mitsubishi Motors Corporation will take a decision on the future of NedCar”.

Despite the poor performance of these two plants, MMC’s global output in 2009 stood at 794,681 units, with overseas production accounting for 46% of total output.

The future of the Normal plant will be confirmed in November 2010, when an announcement on the future of NedCar can also be expected, probably during the presentation to investors of the Mitsubishi ‘roadmap for growth’. Based on declining output at both plants, a lack of investment at either plant, declining market share in North America and Europe, and MMC’s recent Global Small investment in Asia, the future looks bleak for both facilities. Only significant investment tied to a revised regional sales strategy could save one or both of the plants from the axes that have for so long hung over them.